F.A.O. estimates world rice production gain of 1.8%

April 04, 2008
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by Jeff Gelski

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ROME – World rice production is expected to increase 1.8%, or by 12 million tonnes, in 2008 assuming normal weather conditions, the Food and Agriculture Organization of the United Nations said in its first forecast this year, released April 2. The F.A.O. expects international rice trade to decrease, mainly because of restrictions in main exporting countries.

"The international rice market is currently facing a particularly difficult situation with demand outstripping supply and substantial price increases," said Concepcion Calpe, senior economist for the F.A.O. "Higher rice production in 2008 could reduce the pressure, but short-term volatility will probably continue, giving the very limited supplies available from stocks.

"This implies that the market may react very strongly to any good or bad news about crops or policies."

International rice prices have increased about 20% since January, according to the F.A.O. All Price Index. For example, high quality Thai 100% was quoted at $546 per tonne, up 13% compared to February and up 68% compared to March 2007. The F.A.O. foresees international trade in rice this year to reach 29.9 million tonnes, 1.1 million tonnes lower than the revised 2007 trade estimate.

The F.A.O. expects production increases in all the major Asian rice-producing countries. Governments in the region are offering incentives to raise production. The United States should expect a reduced crop, mainly because competition from more profitable crops has led to a cut in rice crop area.

Africa may see a 2% growth in production. Production is expected to recover in Latin America. Rice production in the European Union may rise, but it may contract in Japan.

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